- •Introduction
- •List of tables
- •List of figures
- •Table of cases
- •Table of statutes
- •Glossary
- •1 UK construction sector context
- •1.1 The nature of the sector
- •1.2 The nature of professionalism in construction
- •1.3 The nature of projects
- •1.4 Procurement methods
- •2 Roles and relationships
- •2.1 Common problems
- •2.2 Client roles
- •2.3 Consultant roles
- •2.4 Professional services agreements
- •2.5 Architect
- •2.6 Quantity surveyor
- •2.7 Typical terms in professional services agreements
- •2.8 Integrated documentation
- •3 General contracting
- •3.1 Background
- •3.2 Use of general contracting
- •3.3 Basic characteristics
- •3.4 Risk in general contracting
- •3.5 Standardized approaches to general contracting
- •4 Design-build
- •4.1 Background
- •4.2 Features of DB contracts
- •4.3 Use of the JCT design build form (JCT DB 11)
- •4.4 Characteristics of JCT DB 11
- •4.5 Risk in DB
- •4.6 Approaches to DB
- •5 Construction management
- •5.1 Background
- •5.2 Use of construction management contracts
- •5.3 Principles of CM contracting
- •5.4 Overview of JCT CM Contract
- •5.5 Allocation of risk in construction management
- •5.6 Approaches to construction management
- •6 Collaborative contracting
- •6.1 Background
- •6.2 Use of collaborative contracting
- •6.3 Principles of collaborative contracting
- •6.4 Characteristics of collaborative contracting
- •6.5 Risk in collaborative contracting
- •6.6 Approaches to collaborative contracting
- •7 Risk allocation and procurement decisions
- •7.1 Types of risk in construction contracts
- •7.2 Dealing with risk
- •7.3 Procurement
- •7.4 Identifying and choosing procurement methods
- •7.5 Characteristics of procurement methods
- •8 Contract choice
- •8.1 Use of standard contracts
- •8.2 Contract drafting
- •8.3 JCT contracts
- •8.5 The burgeoning landscape of standard forms
- •9 Tendering and contract formation
- •9.1 The meaning of construction contracts
- •9.2 The formation of contracts by agreement
- •9.3 Contracts made by tender
- •10 Liability in contract and tort
- •10.1 Express terms
- •10.2 Exemption clauses
- •10.3 Incorporation by reference
- •10.4 Implied terms
- •10.5 Liability in tort for negligence
- •11.1 Standard of work
- •11.2 Statutory obligations
- •11.4 Transfer of materials
- •12.1 Implied obligations
- •12.3 Responsibility for the contract administrator
- •12.4 Responsibility for site conditions
- •12.5 Health and safety
- •13 Responsibility for design
- •13.1 Design management
- •13.2 Design duties in law
- •13.3 Legal responsibility for design
- •14 Time
- •14.1 Commencement
- •14.2 Progress
- •14.3 Completion
- •14.5 Adjustments of time
- •15 Payment
- •15.2 The contract sum
- •15.3 Variations
- •15.4 Fluctuations
- •15.5 Retention money
- •16.1 Contract claims and damages
- •16.2 Grounds for contractual claims
- •16.3 Claims procedures
- •16.4 Quantification of claims
- •17 Insurance and bonds
- •17.1 Insurance
- •17.2 Bonds and guarantees
- •18 Role of the contract administrator
- •18.2 Contract administrator as independent certifier
- •19 Sub-contracts
- •19.3 The contractual chain
- •19.7 Collateral warranties
- •20 Financial remedies for breach of contract
- •20.1 General damages
- •20.2 Liquidated damages
- •20.3 Quantum meruit claims
- •21 Defective buildings and subsequent owners
- •21.1 Claims in negligence
- •21.2 Statutory protection
- •21.3 Alternative forms of legal protection
- •21.4 Assessment of damages
- •22 Suspension and termination of contracts
- •22.1 Suspension of work
- •22.2 Termination for breach at common law
- •22.3 Termination under JCT contracts
- •22.4 Termination under NEC contracts
- •22.5 Termination under FIDIC contracts
- •22.6 Termination of contract by frustration
- •23 Non-adversarial dispute resolution
- •23.1 Background to disputes
- •23.2 The nature of construction disputes
- •23.3 The role of the contract administrator
- •23.4 Methods of dispute resolution
- •24 Adversarial dispute resolution
- •24.1 Adjudication
- •24.2 Arbitration
- •24.3 Litigation
- •24.4 Arbitration or litigation?
- •References
- •Author index
- •Subject index
2 Roles and relationships
The roles and responsibilities of each of the members of the project team should be considered carefully, if we are to avoid some of the problems associated with assembling temporary teams of professionals. There are dangers in oversimplifying the problems associated with the need to enter into complex and difficult relationships. Research into the terminology of construction project roles reveals a complex array of disciplines and sub-disciplines, with many different terms for similar roles. Professional terms of appointment use these concepts in tying a project team together, and it is important to ensure that the consultants appointed to a project team are appointed on a basis that is harmonized with the main building contract and its sub-contracts. For this reason, most modern standard forms of construction contract are published in linked suites of agreements. But those who use older editions or piecemeal assemblies of contracts and agreements will face potential problems in mis-matched roles and responsibilities.
2.1COMMON PROBLEMS
The process of building procurement involves a series of different specialists in contributing to the work at different times. These people have widely differing skills; they often work for different organizations, in different geographic locations and at different times. The level of understanding between them is often less than would be desirable. There are several perennial problems that can stand in the way of effective team building in construction projects.
2.1.1Professional pride
There is a wide variety of professional consultants in the construction industry. Undergraduates may be studying on vocational courses, expecting to become professionals. It is very easy to fall into the trap of believing that any profession other than one’s own is somehow inferior. The attitude that sometimes seems to prevail in the industry is that members of ‘other’ professions are greedy, selfrighteous, dim or prima donnas. One must constantly remember that they too have been educated and trained to at least the same level. The intelligence or skill of one’s colleagues in construction should never be underestimated. Pride has its place, but when it becomes conceit it can be very destructive. An associated problem is the way that increasing specialization of roles can lead to certain areas of responsibility falling between the clearly defined roles of the professions, unless attention is paid to the requirements of a project, rather than the needs of the professions.
14 Construction contracts
2.1.2Overlaps between stages
There are many stylized representations of the process of building procurement. The simplest of these involves a sequence of three discrete stages of briefing, designing and then constructing. This view is widespread, but projects rarely happen like this in practice. It may be convenient to teach design as a process separated from construction, but the world is not that simple. It is unwise to develop a brief and then freeze it before design starts, although many people would advise this. A system cannot function properly without feedback and the construction process is a system. Thus it is important that the brief is developed and refined in parallel with the design process. In fact, as the design and construction processes evolve, a sophisticated design brief may not be seen as comprehensive until the project is completed.
Similarly, as the fabrication activities take place on site, information is continuously passing back and forth between designers and fabricators. This consists of clarifications, revisions, shop drawings and ‘as-built’ drawings. It is often essential for designers to leave some details until fabrication is under way. It is not clear how contemporary moves to building information modelling will interact with this need for a constant flow of information between participants. There is no escaping uncertainty of information, no matter how much certainty is desired. Furthermore, the client’s organization is subject to change as time passes – and construction projects can occupy significant passages of time. Indeed, this is one characteristic of construction contracts that distinguishes them from other contracts. During this time, new processes, equipment or materials may emerge, changing the client’s attitude to what was originally in the brief. Alternatively, the economic situation may change or even wipe out the financial viability of a project. Therefore, it is very important to ensure that there is a method for accommodating changes to what was originally specified.
The iteration between the various processes and stages in construction is sometimes acknowledged in the literature on construction management, but its importance can be overlooked by specialists whose own objectives may not be quite in tune with those of the client organization.
2.1.3Extended project participation
Another common but erroneous assumption is that the project team consists of half a dozen main consultants who come together at the start of the project and work as a team, interacting with each other to decide everything necessary to put a building together. This is a simplified picture that takes little account of the large number of other participants.
Even on a small project there may have to be a large number of consultations, as well as approvals, by building inspectors, planning officers, environmental health officers, specialist sub-contractors, suppliers and so on. Project meetings may involve a wide range of specialized advisors and various people carrying out some kind of statutory role. An attendance list from a routine design team meeting for the project may include any of the following: architects, building control officer, electricity board representatives, electrical services engineers,
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Roles and relationships 15 |
Table 2.1: Structure of responsibilities in construction projects |
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Client/ |
Representative |
Client project manager, client’s representative, |
employer |
|
employer’s representative/project manager. |
|
Advisor |
Advisory group, feasibility consultant. |
|
Stakeholder |
End-user, general public, tenant, workforce. |
|
Supplier |
Client’s direct contractor, preferred supplier. |
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|
|
Advisor/ |
Design |
Architect (management function), design leader, lead |
consultant |
leadership |
consultant, lead designer. |
|
Management |
Consultant team manager, design manager. |
|
Design |
Architect (design function), architectural designer. |
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|
Designer, specialist advisor, engineer, consultant (etc.). |
|
Administration |
Architect, contract administrator, supervising officer. |
|
|
principal designer, project administration. |
|
Site inspector |
Clerk of works, resident engineer. |
|
Financial |
Cost advisor, cost consultant, quantity surveyor. |
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|
Constructor |
Overall |
Builder, contractor, lead contractor, general contractor, |
|
responsibility |
main contractor, principal contractor, design-build |
|
|
contractor, design contractor, management contractor. |
|
Constructor’s |
Construction manager, construction planner, contract |
|
staff |
manager, person-in-charge, site agent. |
|
Partial |
Engineering contractor, package contractor, specialist, |
|
responsibility |
specialist contractor, specialist sub-contractor, |
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|
specialist supplier, specialist trade contractor. |
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|
Domestic sub-contractor, labour-only sub-contractor, |
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|
named sub-contractor, nominated sub-contractor, |
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|
nominated supplier, specialist sub-contractor, supply- |
|
|
only sub-contractor, sub-contractor, trade contractor, |
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works contractor. |
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environmental health officer, fire officers, gas board representatives, health officer, heating and ventilation engineers, planning officer, shopfitters, structural engineers, telecommunication engineers, traffic engineers, water board representatives. Even if not present at meetings, their expertise and participation in decision-making will be required at some point in the process. The communication and co-ordination problems among such a diverse group is exacerbated by the fact that key people within such a group may leave and be replaced by others, either because they move to another job, or because, as the project advances, responsibility for contributing to it tends to move from senior to junior people within each organization. Chapman (1998) has shown that this is a very real risk in construction projects and one that is rarely planned for in advance.
Research has shown that even on relatively small projects, as many as two hundred people can be involved in the decisions on construction projects before they reach the site (Hughes 1989). The involvement of such large numbers of participants is not always obvious. Moreover, once the wide range of participants is exposed, the relationships between them are far from clear. Table 2.1 shows how some structure may be imposed on a wide variety of participants, showing how
16 Construction contracts
they may be grouped. This shows an enormous range of terms that describe various project participants, some of which are roughly synonymous with each other and all of which are in current use. It also shows how the traditional role of the architect has become fragmented, with different specialists taking on some aspects of the work. This Table is extracted from a major research project on roles in construction project teams carried out for the UK’s Joint Contracts Tribunal (Hughes and Murdoch 2001). The point of this Table is that there are many diverse terms for roles that are essentially very similar. But each of the terms for these roles has a specific context, and to transfer a term into an unusual context will often result in confusion.
2.1.4Temporary multi-organizations
One result of the specialization and professionalization of the many tasks in the construction process is fragmentation. The reasons for this fragmentation are associated with the fact that a variety of different people come together on a project, temporarily, each with his or her own set of objectives and expectations, each from a separate firm. The reason for the wide variety in the skills needed on a construction project originates from the technical complexity of the problems associated with procuring buildings, creating a demand for detailed specialist knowledge. The need of people to feel as though they belong to a group encourages these technical specialists to group together into professional organizations such as institutions, strengthening the differences between them. These specialists tend to be employed by specialist firms, further reinforcing their differences. This phenomenon is not confined to the construction sector and has long been acknowledged in the organizational literature (as far back as Thompson 1967, for example). Because of this, the divisions brought about by technical complexity are exacerbated by organizational complexity. Finally, because each of the contributing organizations is involved in the project through a contract, the differences in their orientation and allegiances are brought into sharp relief. The fact that these firms come together solely for the purposes of completing a particular project results in a temporary multi-organization (Cherns and Bryant 1984 (see Section 1.3.3). Technical complexity has led to the proliferation of professional institutions; professionalization has led to organizational complexity and organizational complexity has led to legal complexity. Understanding the cumulative effects of these developments is crucial in developing an appreciation of the problems deeply embedded in construction industry practice.
2.1.5Conflict in project teams
The characteristic grouping of project teams very often results in conflict at a variety of levels. Each project participant has particular aims and objectives and, in the past, it has been rare to find contract structures that encourage harmony among these aims. Until relatively recently, project participants have expected to enter into confrontations with each other and with the client. Sadly this is often still the case. The purpose of contracts and appointment documents is to regulate these
Roles and relationships 17
confrontations and to provide a basis whereby one party can enforce the promise of another. It is not their purpose simply to avoid or prevent tension and conflict. However, recent developments have helped to modify expectations. All of the major contract-drafting bodies have moved to a much greater emphasis on integrated packages of documents. While it is not yet clear whether the cause is a new approach to contract drafting, the state of the economy or the introduction of statutory adjudication schemes, the fact is that the industry is a lot less litigious than it used to be, and there is a growing awareness of the need for team-working and the development of long-term business relationships between organizations. Partnering, framework agreements, joint ventures and consortia are growing in their use, and many people feel that this is a great improvement. There are some signs that the increasing use of these approaches is merely a market response to certain high-profile clients who only contract with those who will work along these lines (Gruneberg and Hughes 2005). Moreover, there is always going to be a tension in public sector projects between the need to develop long-term relationships and the expectations of transparency and accountability.
One of the purposes of assembling a team of people from different professions is to harness a variety of views. It should be expected that each person brings his or her own criteria for decision-making; they all have their own agendas and this is as it should be. The tensions thus generated should precipitate debate and dialogue so that clear choices can be made. In other words, controlling conflict is not the same as eliminating it. To quote Tjosvold (1992):
The idea that conflict is destructive and causes misery is so self-evident that it is seldom debated. Employees fight about many issues, but the wisdom of avoiding conflict is too often not one of them. However, it is the failure to use conflict that causes the distress and low productivity associated with escalating conflict. Conflict avoidance and the failure to develop an organization equipped to manage it, not conflict itself, disrupt. Open, skilful discussion is needed to turn differences into synergistic gains rather than squabbling losses.
Interestingly, the problem of handling conflict was also addressed decades ago by the organizational researchers Lawrence and Lorsch (1967). They identified the task of an integrator and stated that such a person, in order to succeed, must be able to deal with conflict. They identified three methods for dealing with conflict: confrontation (choosing, after discussion, a solution from those put forward for consideration), smoothing (avoiding conflict) and forcing (the naked use of power). They found that the most effective integration was achieved in organizations that used confrontation, supplemented as necessary by forcing behaviour to ensure that issues were properly confronted. Smoothing was the least effective method.
Clearly, the problem is not merely a question of avoiding conflict and eliminating disputes, but a more definite problem of how to take advantage of the potential benefits of conflict between team members without removing necessary sanctions between organizations in the project.